IEEE Power & Energy Magazine - September/October 2014 - 41

In general, the industry must revise its assumptions
about weather risk and become more flexible and resilient to
the changing environment.
necessary to build resilient communities and identify the costeffective measures that will best manage the community's
risks. it is necessary to engage communities in discussions
about how climate change will affect their demand for electricity, the implications for supply, and the trade-offs that may
be necessary. local authorities, customers, and others other
stakeholders must be involved in establishing a risk management framework and identifying the cost-effective measures
that will best manage the risks and address vulnerabilities.
growing urbanization involves massive infrastructure investments that will be affected by climate change. electric utilities will
also have to manage climate-related risks associated with public
infrastructure. They therefore have a substantial interest in working with the public sector to map and model risk at the national
level and understand the links that exist among critical infrastructure elements such as sewage, information and communication
technology (icT), and coastal and inland flood management.
The private sector should work with governments to establish
a more comprehensive view of the risk, response, and resilience
strategies that governments at the national and local level have in
place-and to improve them, if possible. governments' response
to the threat of climate change should include encouraging mutual
aid between utilities when a crisis occurs and taking responsibility
for the recovery of communities affected by extreme events.
Regulatory frameworks may need to be redesigned in the
most vulnerable areas to support a system upgrade plan, system design, and equipment standards that will meet the threats
from climate change. They should ensure support for a viable
business model, including incentives to utilities to invest in
adaptation. financing adaptation measures will be difficult if
benefits do not accrue to the companies making the investment.
Strengthening the electricity infrastructure is fundamental to energy security and a key concern for governments all
over the world as well as a central part of the power sector's
social responsibilities. The lessons learned from the companies involved in the WBcSd electric utilities project show
that climate change is leading to the emergence of new business models in the power sector that incorporate new ways of
approaching risks and uncertainty. utilities will face additional
pressure from insurance companies and the financial sector to
improve their understanding and management of climate risks
and to build, design, or retrofit their assets accordingly. in some
countries, regulations (such as those connected with property
rights, insurance, and planning) currently block the emergence
of these new business models. Policies and regulations need to
be adjusted or created to incentivize investments that increase
resilience in operations, power systems, and local communities.
september/october 2014

Recommendations for the Power Industry
✔ Build expertise in analyzing climate information to

better understand risks, especially in scaling global climate models to the local level.
✔ use risk management and risk-cost-benefit analysis
when developing adaptation strategies to determine
which solutions are efficient and cost effective.
✔ continue investing in R&d to develop effective
upgrades to major infrastructure elements, broadening
the range of options and reducing costs over time.
✔ Pool learning, exchange best practices, and share
resources to respond more effectively to extreme events.
Recommendations for Policy Makers
✔ consider market signals and regional regulatory struc-

tures appropriate to local circumstances that can mitigate some of the risks.
✔ Support a business model that is viable in the context of
climate change, including incentives for utilities to invest
in adaptation.
✔ adjust regulations to recognize the high-impact risks
faced today and the likelihood of their increasing frequency in the future.
✔ Reflect climate risks in system specification and equipment standards.
Recommendations for Public-Private Collaboration
✔ organize cross-sector collaboration for long-term

infrastructure planning, and organize mutual aid for
crisis response.
✔ organize effective pooling of technical expertise,
risk assessment, and understanding of socioeconomic
costs and develop new business models to price and
manage risk.
✔ develop more useful, local forecasts over time periods
short enough to be relevant to business decision making
by giving utilities access to climate data and hydrological information.
✔ improve public-private collaboration in sharing information, especially on a local scale, to improve community resilience.

Biography
Maria Mendiluce with the World Business council for Sustainable development.
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Table of Contents for the Digital Edition of IEEE Power & Energy Magazine - September/October 2014